Quick Snapshot — AY 2026-27 Key Dates & Thresholds

Basic Exemption Limit (New Tax Regime — Default): Rs. 3,00,000 (Rs. 3 Lakh)

Basic Exemption Limit (Old Tax Regime): Rs. 2,50,000 (Rs. 2.5 Lakh); Rs. 3 Lakh for senior citizens (60-80 yrs); Rs. 5 Lakh for super senior citizens (80+ yrs)

Standard Deduction (Salaried — New Regime): Rs. 75,000 | (Old Regime): Rs. 50,000

Rebate u/s 87A (New Regime): Up to Rs. 60,000 — for income up to Rs. 12,00,000

Rebate u/s 87A (Old Regime): Up to Rs. 12,500 — for income up to Rs. 5,00,000

Due Date — ITR Filing for Individuals / HUF (non-audit): July 31, 2026

Due Date — ITR Filing for Audit cases: October 31, 2026

Penalty for Late Filing u/s 234F: Rs. 5,000 (Rs. 1,000 if total income is below Rs. 5 Lakh)

MISTAKE #1: Choosing the Wrong ITR Form

❌  The Common Mistake

✅  How to Fix It

Filing ITR-1 when you have capital gains, two house properties, or foreign income.

Filing ITR-4 (Sugam) when turnover exceeds Rs. 3 crore (presumptive limit) or you opt out of presumptive taxation.

Filing ITR-2 when you have business income.

Match your income sources to the correct form:

ITR-1 (Sahaj): Salaried, one house property, other sources — income up to Rs. 50 lakh.

ITR-2: Salaried + capital gains / multiple properties / foreign income.

ITR-3: Business / profession income (non-presumptive).

ITR-4 (Sugam): Presumptive income u/s 44AD / 44ADA / 44AE — turnover limit Rs. 3 crore (for business) & Rs. 75 lakh (for professionals) in AY 2026-27.

Use the ITD’s ‘Help Me Decide’ tool on incometax.gov.in.

MISTAKE #2: Not Reporting All Sources of Income

❌  The Common Mistake

✅  How to Fix It

Forgetting to report interest income from savings accounts, FDs, post office schemes, and PPF interest.

Not declaring rental income from a second property.

Missing freelance or part-time income paid in cash.

Not reporting dividends received from shares and mutual funds (taxable since FY 2020-21).

Download Form 26AS and AIS (Annual Information Statement) from the e-filing portal — they reflect all income reported by deductors.

Report savings bank interest under ‘Income from Other Sources’ — deduction u/s 80TTA up to Rs. 10,000 is available.

Declare all rental income; claim 30% standard deduction u/s 24(a) and municipal taxes paid.

Dividends above Rs. 5,000 from a single company attract TDS @ 10% — report all dividends regardless of amount.

MISTAKE #3: Mismatch with Form 26AS / AIS / TIS

❌  The Common Mistake

✅  How to Fix It

Reporting different income figures than what appears in Form 26AS (TDS data) or AIS (broader income data).

This is one of the most common triggers for IT scrutiny notices u/s 143(1)(a).

Always download AIS and TIS (Taxpayer Information Summary) from incometax.gov.in before filing.

Reconcile every TDS entry in Form 26AS with your salary slips, Form 16, bank statements.

If AIS shows incorrect information, submit feedback directly on the portal to correct it.

Any mismatch that remains must be explained in the ITR or rectified via Revised Return.

MISTAKE #4: Not Declaring Foreign Assets & Income

❌  The Common Mistake

✅  How to Fix It

NRIs filing as Residents failing to disclose foreign bank accounts, overseas investments, or foreign property.

Residents not disclosing ESOP income from foreign companies or foreign dividends.

Missing Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income) in ITR-2/3.

Schedule FA in ITR-2/3 must be filled by Resident and Ordinarily Resident (ROR) taxpayers for all foreign assets.

Foreign income must be reported even if taxes are paid abroad — claim Double Tax Avoidance Agreement (DTAA) credit via Schedule TR.

Penalty for non-disclosure of foreign assets under Black Money Act, 2015: Up to Rs. 10 lakh per asset + prosecution.

Determine your residential status carefully: RNOR status has partial disclosure obligations.

MISTAKE #5: Incorrectly Claiming Deductions Under Chapter VI-A

❌  The Common Mistake

✅  How to Fix It

Claiming Section 80C deduction of Rs. 1.5 lakh but not having supporting investments.

Claiming 80D (Health Insurance) for parents not dependent on the taxpayer.

Claiming 80G donations for cash donations above Rs. 2,000 (not allowed from FY 2017-18 onwards).

Claiming 80C deductions under the New Tax Regime (not available — frequently confused).

Under the New Tax Regime (default from AY 2024-25 onwards), most Chapter VI-A deductions (80C, 80D, 80G, etc.) are NOT available — only 80CCD(2) (employer NPS contribution) is allowed.

Under Old Tax Regime: Ensure all investments/payments are made and receipts documented before ITR filing.

80G deduction: Always donate via cheque/UPI/bank transfer and collect a receipt with the NGO’s 80G registration number.

80C limit is Rs. 1.5 lakh — contributions across EPF, PPF, LIC, ELSS, NSC, etc. combined cannot exceed this.

MISTAKE #6: Errors in Reporting Capital Gains

❌  The Common Mistake

✅  How to Fix It

Not reporting Short-Term Capital Gains (STCG) from equity mutual funds or shares.

Incorrect calculation of Long-Term Capital Gains (LTCG) without indexation.

Ignoring capital gains from sale of property, gold, or debt mutual funds.

Not using Schedule CG correctly in ITR-2/3.

For AY 2026-27 (post-Union Budget 2024 changes): STCG on equity (u/s 111A) taxed at 20%; LTCG on equity (u/s 112A) taxed at 12.5% above Rs. 1.25 lakh.

Indexation benefit for debt mutual funds / property: Removed for debt MF from FY 2023-24; property still gets indexation under old regime.

Import capital gains data directly from broker statements (CDSL/NSDL consolidated account statement) and mutual fund CAMS/KFintech statements.

Use Schedule CG meticulously: Each asset class (equity, property, gold, debt MF) has separate sub-schedules.

MISTAKE #7: Not Verifying the ITR After Filing

❌  The Common Mistake

✅  How to Fix It

Filing the ITR but forgetting to e-verify it within 30 days (reduced from 120 days in 2022).

An unverified ITR is treated as if it was never filed — no refund, no compliance status.

E-verify your ITR within 30 days of filing using Aadhaar OTP (fastest), Net Banking, Bank Account EVC, or Demat Account EVC.

If you miss the 30-day window, you must send a signed physical copy of ITR-V to CPC Bengaluru by Speed Post — with a condonation request.

Check ITR-V status on the e-filing portal under ‘e-Verify Return’ section.

For returns filed before the 30-day rule change: old rules may apply — always use current portal guidance.

MISTAKE #8: Wrong Bank Account Details for Refund

❌  The Common Mistake

✅  How to Fix It

Entering an invalid, closed, or unvalidated bank account number for income tax refund.

Refund gets credited to wrong account or bounces back, leading to refund re-issue delays.

Pre-validate your bank account on the income tax portal (Profile > My Bank Account > Pre-validate).

Ensure the bank account is linked with the same PAN as the ITR.

Nominate one account as ‘Enabled for Refund’ — only pre-validated accounts receive refunds.

If refund fails, you can raise a ‘Refund Re-issue Request’ on the e-filing portal after the original refund bounces.

MISTAKE #9: Missing Carry Forward of Losses

❌  The Common Mistake

✅  How to Fix It

Not filing ITR on time (before July 31) and thus losing the right to carry forward capital losses, business losses, or speculative losses.

Incorrectly entering loss figures or not claiming them in Schedule CYLA/BFLA.

Key rule: Capital losses (both STCL and LTCL), business losses, and speculation losses can be carried forward for 8 years — BUT only if ITR is filed on or before the due date.

House property losses can be carried forward even in a belated return.

Fill Schedule CYLA (Current Year Loss Adjustment) and Schedule BFLA (Brought Forward Loss Adjustment) carefully.

Intra-year set-off: STCL can be set off against both STCG and LTCG; LTCL can only be set off against LTCG.

MISTAKE #10: Not Reporting Income Under New vs Old Tax Regime Correctly

❌  The Common Mistake

✅  How to Fix It

Claiming deductions not available under the New Tax Regime.

Not actively opting for the Old Tax Regime (for business/profession taxpayers) via Form 10-IEA.

Salaried employees not informing their employer of the chosen regime — leading to wrong TDS and mismatch.

From AY 2024-25, the New Tax Regime is the DEFAULT. Salaried individuals must opt OUT to choose the Old Regime.

For salaried taxpayers: regime choice can be changed at the time of ITR filing (more flexibility).

For business/profession taxpayers: once Old Regime is opted out of using Form 10-IEA, switching back is subject to strict conditions (once in a lifetime for those with business income).

Use the tax calculator on incometax.gov.in to compare tax liability under both regimes before deciding.

MISTAKE #11: PAN-Aadhaar Not Linked — Return in Limbo

❌  The Common Mistake

✅  How to Fix It

Filing an ITR when PAN is not linked to Aadhaar — the return will not be processed.

PAN becomes inoperative, TDS deducted at higher rate, refunds withheld.

Link PAN-Aadhaar immediately on incometax.gov.in. Fee for linking after the deadline: Rs. 1,000.

Once linked, PAN becomes operative again within 30 days.

Inoperative PAN consequences: TDS @ 20% instead of applicable rate; no ITR processing; no refund; higher TCS.

Verify PAN-Aadhaar link status at incometax.gov.in > Quick Links > Link Aadhaar Status.

MISTAKE #12: Not Disclosing Exempt Income

❌  The Common Mistake

✅  How to Fix It

Not reporting exempt incomes such as agricultural income, PPF interest, LTA, HRA (fully exempt portion), and tax-free dividends (pre-FY 2020-21).

Exempt income must still be reported in Schedule EI (Exempt Income) — omitting it can look suspicious.

Schedule EI in ITR-2/3 must be filled for all exempt incomes even if no tax is payable on them.

Agricultural income above Rs. 5,000 is required to be disclosed even though exempt — it is used for rate purpose (partial integration) if non-agricultural income also exists.

HRA exemption: Correctly calculate minimum of three conditions u/s 10(13A). If HRA not in salary, claim deduction u/s 80GG under Old Regime.

Disclose all LTCG on equity up to Rs. 1.25 lakh (exempt threshold) in Schedule 112A — this prevents mismatch with broker reports.

MISTAKE #13: Claiming HRA Without Proper Documentation

❌  The Common Mistake

✅  How to Fix It

Claiming HRA exemption without rent receipts or rent agreement.

Not deducting TDS on rent where landlord’s annual rent exceeds Rs. 2.4 lakh (Section 194-IB).

Declaring wrong landlord PAN or no PAN for rent above Rs. 1 lakh per year.

Collect signed rent receipts for every month of the financial year — essential if ITR is scrutinised.

If annual rent paid exceeds Rs. 2,40,000 to a single landlord: deduct TDS @ 5% (as tenant) u/s 194-IB and deposit using Form 26QC.

Landlord PAN mandatory if annual rent exceeds Rs. 1,00,000 — provide to employer for Form 16 and retain with your records.

For rented accommodation in Metro cities (Delhi, Mumbai, Chennai, Kolkata), HRA exempt = 50% of basic salary.

MISTAKE #14: Errors in Salary Income Reporting

❌  The Common Mistake

✅  How to Fix It

Not tallying salary in ITR with Form 16 Part-B (detailed salary breakup).

Including employer’s PF contribution in gross salary (it is not taxable in the employee’s hands).

Incorrectly including perquisites like ESOPs, company car, or interest-free loan at wrong values.

Use Form 16 Part-B as the primary reference for salary income details. Enter each allowance/perquisite in the correct sub-head under ‘Salary’ in ITR.

ESOPs are taxable as perquisite at the time of exercise — the difference between Fair Market Value (FMV) on exercise date and exercise price is treated as salary income.

Start-up employees: ESOP tax deferred to earliest of sale, five years from allotment, or cessation of employment (Section 80-IAC benefit companies).

Check that all employer-paid allowances (LTA, medical, uniform, phone) are correctly claimed or taxed as per applicable rules.

MISTAKE #15: Not Filing ITR When TDS Has Been Deducted

❌  The Common Mistake

✅  How to Fix It

Believing that since TDS is deducted, filing ITR is not required.

Missing out on TDS refunds by not filing ITR.

TDS deducted does NOT eliminate the obligation to file ITR if your income exceeds the basic exemption limit or if you have multiple income sources.

If total tax liability is lower than TDS deducted, you can claim a REFUND — but only by filing ITR.

Even if income is below the basic exemption limit, filing ITR is mandatory in certain cases: foreign travel expenditure exceeding Rs. 2 lakh, electricity consumption above Rs. 1 lakh, professional tax deposited, etc. — as per Section 139(1) seventh proviso.

File ITR to get your TDS refund — refunds are processed typically within 20-45 days for e-verified returns.

MISTAKE #16: Incorrect Reporting of Home Loan Interest

❌  The Common Mistake

✅  How to Fix It

Claiming deduction u/s 24(b) for under-construction property where possession not yet received.

Claiming both principal (80C) and interest (24b) deductions without completing 5 years of ownership.

Not reporting pre-EMI interest (deductible in 5 equal instalments post-possession).

Section 24(b): Deduction for home loan interest is Rs. 2 lakh for self-occupied property (Old Regime). For let-out property, full interest is deductible — but set-off of house property loss against other heads is capped at Rs. 2 lakh per year.

Under New Tax Regime: Deduction u/s 24(b) is NOT available for self-occupied property; let-out property interest deduction is available.

Pre-construction interest: Aggregate pre-construction interest deductible in 5 equal annual instalments starting from the year of possession.

Section 80C principal repayment: If property is sold within 5 years of possession, all deductions claimed earlier are reversed and taxed in the year of sale.

MISTAKE #17: Not Reporting Cryptocurrency & Virtual Digital Asset (VDA) Transactions

❌  The Common Mistake

✅  How to Fix It

Not declaring income from buying, selling, or transferring Bitcoin, Ethereum, NFTs, or other VDAs.

This is one of the most rapidly growing scrutiny areas for AY 2026-27.

Section 115BBH (introduced from FY 2022-23): All income from transfer of Virtual Digital Assets (VDA) is taxed at flat 30% — no deduction allowed except cost of acquisition.

TDS @ 1% u/s 194S deducted by crypto exchanges on every transaction above Rs. 50,000 (Rs. 10,000 for specified persons) — reflected in Form 26AS.

Losses from VDA CANNOT be set off against any other income, nor carried forward to subsequent years.

Report VDA transactions in Schedule VDA in ITR-2/3. Each buy-sell transaction must be reported separately.

Foreign crypto holdings must also be disclosed in Schedule FA.

MISTAKE #18: Ignoring Section 139(9) — Defective Return Notice

❌  The Common Mistake

✅  How to Fix It

Filing a return with incomplete information, missing schedules, or mathematical errors causing it to be declared ‘Defective’ u/s 139(9).

Not responding to the defective return notice within the allowed time.

The Income Tax Department issues a defective return notice u/s 139(9) via email and on the portal when the filed return is incomplete.

Response window: 15 days from the notice date (extendable on application).

Respond on the e-filing portal under ‘Pending Actions > e-Proceedings > e-Notices’ to rectify and re-file the defective return.

If not corrected within time, the return is deemed invalid — treated as if no return was filed.

MISTAKE #19: Incorrect ITR for Freelancers & Professionals

❌  The Common Mistake

✅  How to Fix It

Freelancers filing ITR-1 instead of ITR-3 or ITR-4.

Not reporting income under ‘Business/Profession’ head and instead showing it as ‘Other Sources’ — this can lead to wrong tax calculation.

Not availing presumptive taxation u/s 44ADA for professionals with gross receipts below Rs. 75 lakh.

Freelancers / professionals (doctors, lawyers, architects, CAs, consultants, etc.) must file ITR-3 or ITR-4.

Section 44ADA (Presumptive Scheme for Professionals): For gross receipts up to Rs. 75 lakh in AY 2026-27, professionals can declare 50% as presumptive profit — no books of account required (if digital receipts exceed 95% of total receipts).

Under 44ADA, no deduction for business expenses is separately allowed — the 50% deemed profit is the final taxable income from the profession.

Freelancers with business income (not specified profession) use Section 44AD — 8% of turnover as profit (6% if digital receipts) — for turnover up to Rs. 3 crore.

MISTAKE #20: Not Filing Revised Return When Errors Are Discovered

❌  The Common Mistake

✅  How to Fix It

Accepting a tax demand notice without checking for errors in the original return.

Not using the Revised Return option to correct mistakes found after filing.

Section 139(5) allows filing a Revised Return at any time before the end of the relevant Assessment Year or completion of assessment — whichever is earlier.

For AY 2026-27: Revised Return can be filed up to March 31, 2027.

A Revised Return completely replaces the original return — ensure all information is re-entered correctly, not just the corrected parts.

Updated Return u/s 139(8A): If you missed income, you can file an Updated Return within 2 years from the end of the relevant AY — but you must pay an additional tax of 25% (if filed within 1 year) or 50% (if filed in the 2nd year) on the tax and interest payable.

Updated Return cannot be filed if it results in a refund, reduction of income, or increased loss.

Mistake / Non-Compliance

Applicable Provision

Penalty / Interest

Late Filing

Section 234F

Rs. 5,000 (Rs. 1,000 if income < Rs. 5 lakh)

Non-Filing when mandatory

Section 271F

Up to Rs. 5,000

Concealment of Income

Section 271(1)(c)

100% to 300% of tax evaded

Under-reporting of Income

Section 270A

50% of under-reported tax; 200% if misrepresentation

Interest on tax dues

Section 234A/B/C

1% per month simple interest

Non-disclosure of foreign assets

Black Money Act 2015

Up to Rs. 10 lakh + prosecution

Wrong PAN / PAN-Aadhaar not linked

Section 139A / 234H

Rs. 1,000 fee + higher TDS @ 20%

Non-response to defective return

Section 139(9)

Return treated as invalid / not filed

VDA income not reported

Section 115BBH + 270A

30% tax + 50%-200% penalty + prosecution possible

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